The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 28, 2023. REUTERS/Staff/File photo
European shares rose on Wednesday, echoing an upbeat mood in Asian markets following Chinese tech giant Alibaba’s break-up plans, while strong outlook from chipmaker Infineon and a CEO change at Swiss bank UBS further aided the mood.
The benchmark STOXX 600 index rose 0.7 percent, largely in line with gains in Asian equities.
UBS Group AG gained 1.7 percent after the lender announced that Sergio Ermotti will take the helm to steer its takeover of smaller peer Credit Suisse.
Credit Suisse climbed 1.4 percent, while financial services and banking indexes rose between 0.8 percent and 1 percent.
“I can see why the market has stabilized and it’s true that there are some slightly comforting factors. The Fed (bets) have been repriced down quite aggressively in the past few weeks and investor positioning is very defensive,” said Vincent Chaigneau, head of research at Generali Investments.
“But what is going to dominate is cyclical deterioration and aftershocks from the banking stress. It’s very likely that we see a credit crunch with bank lending standards tightening much further.”
The benchmark STOXX 600 was headed for monthly losses, with banks set for a nearly 16 percent slump after the collapse of two U.S. mid-sized lenders and the takeover of Credit Suisse fuelled concerns about the health of the banking sector.
Still, signs of economic resilience and hopes of major central banks nearing the end of their monetary tightening cycle put the STOXX 600 on course for quarterly gains.
German consumer sentiment is set to nudge up in April as energy prices have relented somewhat from record highs, though a full recovery is not in sight anytime soon, a GfK institute survey showed.
Germany’s Infineon climbed 4.8 percent after the chipmaker raised its outlook for both its fiscal second quarter and the whole of 2023.
The wider tech index climbed 1.7 percent to lead sectoral gains, with other semiconductor stocks, including STMicroelectronics and AMS, also rising despite a downbeat forecast from U.S. chipmaker Micron Technology.
Aroundtown fell 4.8 percent to a fresh record low after the German real estate company reported a full-year net loss of 457 million euros and said it was suspending dividend payout due to market uncertainties.
Mercedes-Benz slipped 1.9 percent after news Kuwait’s sovereign wealth fund is planning to reduce its stake in the German luxury carmaker via the sale of 20 million shares.
Meanwhile, the retail index slid 0.9 percent following a cautious outlook from British fashion retailer Next.
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